Fitch Rates WellPoint's Planned Issuance 'BBB(EXP)'

  Fitch Rates WellPoint's Planned Issuance 'BBB(EXP)'  Business Wire  CHICAGO -- August 7, 2014  Fitch Ratings has assigned a 'BBB(EXP)' rating to WLP's planned issue of senior notes of various maturities. The ratings are equivalent to Fitch's ratings on WLP's currently outstanding senior notes.  Fitch anticipates WLP using proceeds from the planned issuance for general corporate purposes, including pre-funding $500 million of 5.0% senior notes maturing in December 2014 and redeeming all, or a portion of, $1.1 billion of 5.250% senior notes due January 2016.  On Aug. 5, 2014, Fitch downgraded WLP's long-term ratings, including ratings on WLP's outstanding senior unsecured notes, one notch to 'BBB' and revised the Rating Outlook to Stable from Negative. The principal reason for the downgrades was Fitch's expectation that WLP's financial leverage metrics were likely to remain elevated relative to Fitch's prior expectations. See Fitch's Aug. 5, 2014 rating action commentary for more details.  KEY RATING DRIVERS  The 'BBB(EXP)' ratings assigned to WLP's planned issuance reflects expectations that WLP's financial leverage and capitalization metrics will be consistent with Fitch's 'BBB' Insurer Financial Strength (IFS) rating category guidelines and that the company's debt service capabilities will be consistent with Fitch's 'A' IFS rating category guidelines. The ratings also consider WLP's market position and size and scale characteristics which Fitch considers reflective of 'AA' IFS rating category guidelines.  Fitch's expectation is that after the issue and WLP's anticipated actions regarding the issues' proceeds, that the company's ratios of debt-to-EBITDA (based on trailing four quarters EBITDA) and debt-to-capital will approximate 3.0X and 40% respectively. Fitch expects the issue and redemptions to have a modest impact on interest expense and believes the company's operating EBITDA-based interest coverage ratios will be in a range of 8x-11x.  RATING SENSITIVITIES  Due to WLP's elevated financial leverage, Fitch has applied non-standard notching to increase the number of notches between the company's Issuer Default Rating (IDR) and ratings on the company's senior unsecured notes. Fitch would consider applying standard notching, resulting in a one-notch upgrade to the rating on WLP's senior unsecured notes, if the company's run-rate debt-to-EBITDA ratio approximated 2.5x.  Rating sensitivities that could lead Fitch to upgrade all ratings are:  --Run-rate debt-to-EBITDA and debt-to-capital ratios approximating 2.2x and 35%, respectively;  --Maintenance of organization-wide NAIC risk-based capital ratios (on a company action level basis) above 250%;  --Run-rate EBITDA-based margins approximating 9%.  The following factors could lead to a downgrade of all ratings:  --Run-rate debt-to-EBITDA or debt-to-capital ratios that exceed 3.0x and 40%, respectively;  --Organization-wide NAIC risk-based capital ratios (on a company action level basis) below 225%;  --Run-rate operating EBITDA-based interest coverage less than 6x or EBITDA-to-revenue ratios less than 6%;  --Acquisitions that Fitch believes carry inordinate integration risks or are aggressively financed;  --Material goodwill impairments that cause Fitch to question the value of one of WLP's acquisitions;  --One or more of its subsidiaries' losing the right to use the Blue Cross or Blue Shield brands.  The following rating has been assigned:  WellPoint, Inc.  --Senior unsecured notes rated 'BBB(EXP)'.  Additional information is available at www.fitchratings.com.  Applicable Criteria and Related Research:  --'Insurance Rating Methodology' (Nov. 13, 2013);  --'Health Insurance and Managed Care (U.S.) Sector Credit Factors' (Dec. 18, 2013).  Applicable Criteria and Related Research:  Health Insurance and Managed Care (U.S.)  http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724819  Insurance Rating Methodology  http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723072  Additional Disclosure  Solicitation Status  http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=846616  ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.  Contact:  Fitch Ratings Primary Analyst Mark Rouck, CPA, CFA, +1 312-368-2085 Senior Director Fitch Ratings, Inc. 70 West Madison Street Chicago, IL 60602 or Secondary Analyst Bradley S. Ellis, CFA, +1 312-368-2089 Director or Committee Chairperson Jim Auden CFA, +1 312-368-3146 Managing Director or Media Relations: Brian Bertsch, +1 212-908-0549 brian.bertsch@fitchratings.com  
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